Hcs 405 Health Care Financial Accounting - Sensitivity Analysis Paper

Sensitivity Analysis Paper
Learning Team B
HCS/405 Health Care Financial Accounting
May 2, 2016
Professor Jack Heinen

Introduction

         Patton-Fuller Community Hospital has been operating since 1975. Besides operating with the objective of maintaining patient care their top priority, there are other factors that require the facility's operations attention. The factors that influence the health care staffing observed at Patton-Fuller, which includes raises in wages, nurse-to-patient ratio, the reduction of contracted staff, and the supplemental staffing of nurses aides. By employing trend analysis, the management team determines the type and amount of employees needed for the medical facility to sustain or enhance operations above the standards. Using trend analysis reveals the costs that are correlated with diminishing nurse-to-patient ratio, and the impact will be addressed. Planning, executing decisions on staffing, and managing funds are a few of the vital duties of a financial manager.

Raises in Wages and Changes to Nurse-To-Patient Ratio

Anytime there is a change in an organization, and patients are affected somehow. One of the significant changes that impact patients a great deal is when wages are adjusted for clinical

 employees. One way that organizations such as Patton-Fuller attempt to solve the nationwide

 nursing shortage is to increase the salaries to entice potential candidates. Unfortunately, these tactics only temporarily address the nursing shortage. By increasing the nursing salaries at Patton-Fuller Community Hospital, more qualified and ambitious nurses will be drawn to the organization thus solving obstacles with the nurse-to-patient ratio. Albeit this may be the most costly option; it will endure. Hiring additional nurses at a lower wages increases the chance of high turnover due to unsatisfied workers and risking patient safety and quality of care.

 On the another hand, patient care will always be positively affected when wages are increased and when mandated staffing ratio is used. The mentioned modifications will ultimately make the organization more profitable because when a hospital has a high patient satisfaction and ratings, more clients will choose the hospital for their medical needs.  Furthermore, higher pay for nursing staff will allow for expansion of nurse education, which will ultimately not only retain but ensure the additional supply of future nurses (Lovell, 2006).

Comparative Analysis

When a healthcare organization wants to know how well or bad they are operating, a comparative analysis can be conducted on their financial statements. This type of analysis was performed for Patton-Fuller Community Hospital using the audited and unaudited expense reports. According to the documents, the retained earnings (or "Net Worth" or "Unrestricted Fund Balance") drastically decreased from 2008 to 2009. The dollar amount went from $335,035 in 2008 to $125,564 in 2009 and shows a 65% decrease or -$209,471. The long-term debt increased to more to than 116% going from $209,255 in 2008 to $452,945 in 2009. Total current liabilities also increased as a whole by 184.09% going from $8,380 to $23,807. The operating income decreased by 98% going from ($16,110) in 2008 to ($311) in 2009 and the non- operating income had a reduction of $264 in 2008 to ($62) in 2009. Total revenue went from $421,314 in 2008 to $462,982 in 2009, and it clearly shows an increase of 10% or $41,668 for the hospital.